FDIC Consumer News

Finding money to put into savings can seem difficult, but there are some strategies that can make it easier. Start by asking yourself these questions.

Do I have savings goals? Knowing how much you want to save and why can help you stick to a plan.

For example, if you have a young child, ask yourself if you plan to help pay for college. Research indicates that children who have a college savings fund are more likely to go to college than those who don’t. Start by looking at "529 plans" sponsored by your state (typically with cost and tax benefits for residents) and compare them to other 529 plan options. Learn more about college planning at www.studentaid.ed.gov/prepare-for-college.

How can I spend less? Review how much you spent in the last month and consider ways to cut back. "Start by reviewing recurring expenses — even small ones — and determine what you might be able to cut out, downgrade, or find a better deal on elsewhere," said Luke W. Reynolds, Chief of the FDIC's Outreach and Program Development Section.

Do I have an emergency savings fund? Financial experts generally recommend that you have at least six months of living expenses in a federally insured product, such as a savings account or a certificate of deposit (CD). The idea is to help you withstand a major reduction in income, such as from a job loss, or to pay for a major, unexpected home or car repair. To build your "rainy day fund," consider a combination of regular, automated deposits and any "windfalls" you receive, perhaps from a tax refund or a bonus at work.

Am I saving money on a regular basis? "Automatic transfers into savings on a set schedule can help you save money before you spend it," said Bobbie Gray, an FDIC Supervisory Community Affairs Specialist.

How much investment risk am I willing to take? Investments such as stocks, bonds and mutual funds can produce higher returns than bank deposits over many years, but you could also lose some or all of that money. (Remember, nondeposit investments are not insured by the FDIC against loss.)

In general, the longer you plan to keep money invested and the greater your tolerance for volatility, the more likely these investments can help you reach your targets.

Am I saving enough for retirement?For many, the answer is "no" even when they think it is "yes." Options to save include workplace retirement plans, Individual Retirement Accounts (IRAs) offered by many banks and investment companies, and the U.S. Treasury Department's new "myRA" (MyRetirement Account) program.

The myRA account is a simple, safe and affordable retirement savings program that is backed by the U.S. government. Savers can open an account with as little as $25, there are no fees, the account will earn interest at a variable rate, and the investment is protected so the account balance will never go down. To learn more about myRA, go to www.treasurydirect.gov/readysavegrow/start_saving/myra.htm.

"Many working people can save considerably on their taxes through qualified retirement savings. And, if your employer offers a retirement savings program of any kind, find out whether it will match your investment contributions, and then don't lose out on any matches," Reynolds added.

To learn more about ways to save, see resources from more than 20 federal agencies, including the FDIC, at www.mymoney.gov.

Member FDIC

All funds in a "non-interest-bearing transaction account" are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC's general deposit insurance rules.

The term "non-interest-bearing transaction account" includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, money-market deposit accounts, and Interest on Lawyers Trust Accounts ("IOLTAs").

For more information about temporary FDIC insurance coverage of transaction accounts, visit www.fdic.gov.